Preparing for Brexit and residency in Spain

The Brexit transition period agreed in March gives British expatriates and those wishing to move to Spain more time to prepare. This was welcome news, but a small delay like this could slow people down in taking crucial actions that are fairly urgent - the clock is still ticking to get ready in time, particularly where paperwork is involved.

The key issue for many people is residence ¬– If you are already living here, will there be any problems with you staying after Brexit? If you are still arranging your move to Spain, how can you secure residence in time?

In December 2017 the UK and EU27 committed to maintain existing residency rights for Britons and EU nationals who are “lawfully residing” within either area before the withdrawal date. This confirmed that citizens on both sides can continue "to live, work or study as they currently do under the same conditions as under Union law".

Although the official Brexit date is 29th March 2019, the transition period effectively ‘pauses’ Brexit until 31st December 2020 to enable citizens and businesses to prepare for the incoming changes. But this is not long in the scheme of things, especially as bureaucracy could delay the process when many others may be submitting similar paperwork at the same time as you, so it is advisable to start the process as soon as possible.

If you are settled in Spain before the end of 2020, you should keep the right to stay there for as long as you remain resident. But what does “lawful residency” mean in practice? How close can you get to demonstrating this by that time?

Beyond Brexit, we do not yet know how acquiring residency, visas and permits will work, but can expect this to be less straightforward than today.

As a foreigner living in Spain, there are a number of things you should do anyway to register here, regardless of Brexit.

All EU/EEA nationals staying in Spain more than three months should have the residence certificate called Certificado de Registro de Ciudadano de la Unión (also known as Certificado de Registro Comunitario).

If you spend more than 183 days here you are also obliged to register with your local municipal registry (Padrón Municipal).

Residents (and those owning Spanish property) also need to have the fiscal identification number Número de Identificación de Extranjero (NIE).

Of course, if you meet any of the criteria to be tax resident (it is not just about day counting), you also should have formally registered with the Spanish tax office and submitted annual income tax and wealth tax (if applicable) returns.

Residents of Spain are liable to Spanish taxation on worldwide income and capital gains, and wealth tax on worldwide assets (depending on your net wealth). Spanish succession and gift tax is chargeable on assets located in Spain or if the recipient of an inheritance or a lifetime gift is Spanish resident. Spanish residents are also required to submit an informative return (Modelo 720) to list overseas assets exceeding €50,000 in certain categories.

Longer-term residents of Spain can take further steps. If you can demonstrate continuous legal residence in Spain for at least five years you can apply for permanent residency. If you can do this for 10 years, Spanish nationality is an option – but you would have to renounce your UK nationality first.

There may be other steps you can take, even if you have only been here a short while, to help demonstrate your Spanish residence before Brexit.

Once you are settled here (this applies to all EU countries), existing partners and close family members will be able to join you, even after Brexit. Also, agreement has not yet been reached on onward freedom of movement – i.e. you have the automatic right to move to another EU country after Brexit.

Take personalised advice to establish what steps, if any, you still need to take to formalise your residency in Spain, and in what order. Talk to Blevins Franks early on for guidance on how your affairs should be structured to avoid unintended consequences. They can review your tax and estate planning, pensions and savings and investments to make sure they are set up in the best way for your life in Spain, pre and post Brexit.

Blevins Franks accepts no liability for any loss resulting from any action or inaction or omission as a result of reading this article, which is general in nature and not specific to your circumstances. Summarised information is based upon our understanding of current laws and practices which may change. Individuals should seek personalised advice.

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Blevins Franks has been providing specialist financial advice to British expatriates across Europe for over forty years. Our expertise covers tax, estate planning, pensions and investment management to offer a genuinely holistic approach to financial planning.

If you’re living abroad, thinking about moving, or planning to return to the UK, we can help you make the most of your wealth in the most tax-efficient way possible.